Debt settlement company settles over enrollment fees
AUGUSTA, Maine (Legal Newsline) - Maine Attorney General William Schneider announced an agreement on Tuesday with a Texas debt settlement company and its owner to settle allegations of unfair trade practices.
Credit Solutions of America Inc. and owner Douglas Van Arsdale allegedly violated the Maine Unfair Trade Practices Act with an advance fee debt settlement scheme.
Since 2003, CSA has provided debt management services to consumers in Maine by promising to negotiate with creditors in order to obtain a settlement of credit card and other unsecured debts. CSA allegedly collected advance fees of up to 15 percent of the total enrolled debt to be negotiated and claimed it could eliminate 40 to 60 percent of a consumer's debts.
In most cases, CSA allegedly held consumers responsible for paying the enrollment fee, regardless of whether all of the enrolled debt was settled. Of the 561 Maine consumers who enrolled with the company and paid its advance fees, only six settled their debts at 40 percent of the total debt owed.
"Maine consumers in financial distress are particularly vulnerable to deceptive marketing of debt relief services," Schneider said. "Despite CSA's claims that consumers who enrolled in their program would be debt free in 36 months, the truth is that debt relief is not a quick fix."
Under terms of the consent judgment, CSA and Van Arsdale will not accept payment in advance of providing services, will not enter enrollment contracts with new Maine consumers and will pay $150,000 for litigation costs related to the resolution of these claims.
CSA will be permitted to continue to provide services to existing Maine customers in compliance with state law. Debt management companies are required to be bonded and licensed through the Maine Bureau of Consumer Credit Protection. These companies must offer an approved consumer education program and ensure the proper certification of their debt management counselors.